Personal loan types and applications

 


A personal loan is a type of debt that can be obtained via a bank, credit union, or even an online lender. It's frequently used to pay for an unexpected expense, make home upgrades, or restructure debt. The majority of personal loans are given as a cash payment and paid back in installments over a specified period of time. Customers can expect to pay anywhere from 4 to 36% in interest depending on the type of financing they choose (variable or fixed prices). 

Secured personal loans 

Secured personal loans necessitate the use of an asset as security. If you default on your loan payments, a lender may take and sell your home to repay the money you owe. You may be able to receive a loan in Australia by using your home, car, or even other assets to pay. Whether you have bad credit or not, this would be referred to as a title loan, and this can help you secure a instant cash loan or even a bank overdraft.

Unsecured Personal loans

Customers with good or better credit should use unsecured personal loans. To get authorised for one of these lending products, no collateral is required. Because the lender bears more risk, you'll generally pay higher interest than on a secured private loan.

Debt consolidation loans

Debt consolidation loans were frequently used to pay down existing debt levels more quickly. Borrowers may benefit from the streamlined payback process. The goal is to get a loan with such a reasonable interest rate that you can pay off the debt you want to consolidate.

A debt consolidation loan might help you pay off credit card debt. You'll use the money to pay off those debts and make the payments on a new loan. If you don't stop swiping the card numbers when you've cleared the amounts, this can be dangerous. 


 

Co-signed and joint loans 

If you don't qualify for such a personal loan on your own, you might be able to get there with a co-signer. To improve your chances of approval, your co-borrower must have good or exceptional credit. Many lenders can provide joint loans that give both borrowers access to the funds.

Fixed-rate loans

This includes the majority of personal loans. Fixed-rate loans have an interest rate that stays the same throughout the repayment period. It's easier to fit loan payments within the budget because they aren't affected by price or interest rates; all you have to worry about is how much you owe.


 

Variable-rate loans

Variable-rate loans have an interest rate that fluctuates based upon that bank's benchmark interest rate, which means your monthly bill might go up or down. Variable-rate loans have monthly interest rates that might fluctuate. Rates can be lower than those of a fixed-rate loan. This form of personal loan should only be considered if you just need money for a period of 2 months.

A personal credit line 

A personal credit line works similarly to a credit card, giving you access to a large pool of funds from which you can draw money whenever you need it. Unlike fast cash loan, where you must pay interest on the entire loan amount, you will only be charged interest on the money you borrowed.

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